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Real Estate & Construction News Roundup (7/10/24) – Strong Construction Investment in Data Centers, Increase Use of Proptech in Hospitality and Effects of Remote-Work on Housing Market

August 05, 2024 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
In our latest roundup, renters stay in their units longer, GenAI change how commercial real estate operates, and banks continue high exposure due to commercial real estate.

Strong investor interest, particularly in opportunistic and value-add segments, signals a strong market for construction firms specializing in high-yield projects. (Sebastian Obando, Construction Dive)
A growing number of renters are staying in their units for longer periods of time than they did a decade ago with over one-third of U.S. renters have lived in the same apartment for more than five years. (Mary Salmonsen, Multifamily Dive)
Several U.S. regional and mid-sized banks continue to face the squeeze from high exposure to the commercial real estate sector that has been shaken by higher-for-longer interest rates and empty office buildings. (Reuters)

Read the full story...
Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

Bremer Whyte Sets New Precedent in Palos Verdes Landslide Litigation

August 26, 2024 — Dolores Montoya - Bremer Whyte Brown & O'Meara LLP
In what is believed to be a groundbreaking new precedent, Bremer Whyte Brown & O’Meara’s Los Angeles litigation team has obtained a landmark ruling on behalf of residents in the “Portuguese Bend” neighborhood of Palos Verdes, California. Congratulations to Partner Michael D’Andrea and Senior Associate Shelly Mosallaei in receiving this result for our clients. Plaintiff, a real estate developer, sued a number of local residents and property owners, including our client, alleging that their failure to address landslides and geological disturbances around Plaintiff’s property constituted a legal trespass and nuisance. Plaintiff alleged that its plans to develop multiple lots in Palos Verdes was thwarted because Defendant’s soil and land encroached onto Plaintiff’s property. Plaintiff’s suit against multiple residents created an uproar in the community regarding who was ultimately responsible (if anyone) for natural soils movement that has plagued this neighborhood for years. Read the full story...
Reprinted courtesy of Dolores Montoya, Bremer Whyte Brown & O'Meara LLP

Climate Disasters Are an Affordable Housing Problem

October 01, 2024 — Juan Pablo Garnham & Arjuna Heim - Bloomberg
When Maui was devastated by wildfires in August 2023, some residents were initially fortunate. The neighborhood of Makawao, for example, was spared the worst effects of the fire that engulfed Lahaina, 35 miles to the west. Recently, though, we met a woman in that neighborhood who faces a different kind of threat: Her landlord has now demanded that she pay double her rent or face eviction. As housing advocates in the region, we’ve heard stories like this repeatedly, as residents report an acute fear of displacement and homelessness. A year after the fires killed more than 100 people, displaced 12,000 and disrupted the economy of the island, the disaster lingers for many in Maui and Hawai'i. Rents across the island have increased sharply, offering a cautionary tale for the rest of the US about how climate change, a housing crisis and the lack of adequate public policies can multiply the suffering of a community already in pain. Read the full story...
Reprinted courtesy of Bloomberg

Bright-Line Changes: Prompt Payment Act Trends

September 16, 2024 — Stephanie L. Cooksey - Peckar & Abramson, P.C.
Untimely payment by the owner for contract work and additional work on construction projects can place an unfair financial burden on contractors and subcontractors. Most states have attempted to eliminate or mitigate this inequity in construction contracting through Prompt Payment Acts that govern payment deadlines and provide remedies for untimely payment. This article addresses the legislative trends aimed at minimizing the risk of non-payment, overdue payment, and withholding retainage in favor of downstream parties to a construction contract. Fortifying Contractor Protections with “Bright-Line” Language Over the last decade, states have been tightening prompt payment laws by replacing broad, general statutory language with bright-line rules. What is a bright-line rule? A specific or definite figure, a quantifiable marker—i.e., something owners, contractors, subcontractors, and suppliers should be aware of. Practically speaking, the more bright-line a prompt payment statute is, the greater the likelihood it will affect a construction project in your state. A standard form construction contract, if not reviewed carefully, can create conflicts or confusion if it gives a party more leeway on payment deadlines than the applicable Prompt Payment Act. For example, consider an owner-issued Construction Change Directive (“CCD”) that requires a contractor to commence additional work immediately while a formal change order is negotiated. Consequently, a CCD can push financial burdens downstream, whether inadvertently or not, and may conflict with statutory payment deadlines. Nevertheless, an owner can be justified in its utilization of a CCD to maintain the project schedule. How should the parties competing interests be resolved? Read the full story...
Reprinted courtesy of Peckar & Abramson, P.C.

Are Mechanic’s Liens the Be All End All of Construction Collections?

August 12, 2024 — Christopher G. Hill - Construction Law Musings
For those of you familiar with Construction Law Musings, you are aware of my affinity and discussion of those powerful but tricky collection tools: mechanic’s liens. You have heard me tout their ability to secure payment when a contractor or subcontractor has not been paid on a construction project (even in the face of bankruptcy). If you read my construction law blog regularly (though recently not-so-regularly updated), you could get the impression that a mechanic’s lien is an automatic avenue to payment. While mechanic’s liens can be a powerful collection tool, this post is going to discuss some pros and cons of recording, and ultimately suing to enforce, a mechanic’s lien in Virginia. Read the full story...
Reprinted courtesy of The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

"On Second Thought"

October 28, 2024 — Daniel Lund III - Lexology
Rehearing requests are seldom granted by courts, and when they are, there’s usually something uniquely compelling in the request and the granting. So is the case in a matter involving monies deposited in the registry of the federal court in New Orleans related to work performed on cleanup after Hurricanes Maria and Irma in the U.S. Virgin Islands. The party depositing monies – which represented subcontract sums paid to it by the general contractor – held back several hundred thousand dollars based on withholding provisions in the various contracts in play. The Court was tasked with evaluating not only a pay-when-paid provision in the subcontract of the claiming party, but also incorporation of the terms of a higher tiered contract which allowed for the withholding. The Court initially granted summary judgment allowing the monies to be withheld. However, on request for rehearing, it was pointed up that while monies could be retained for purposes of covering attorney’s fees and costs related to litigation initiated by the plaintiff subcontractor’s vendors, there was a particular process for that withholding – and an assertion that the process was not followed. Read the full story...
Reprinted courtesy of Daniel Lund III, Phelps
Mr. Lund may be contacted at daniel.lund@phelps.com

2025 Construction Law Update

January 07, 2025 — Garret Murai - California Construction Law Blog
It’s that time of year again. The second half of the 2023-2024 legislative session saw the introduction of 2,124 bills, of which, 1418 were signed into law. Among the bills signed by the governor impacting contractors is an increase in the small work licensing exemption for $500 to $1,000, the licensing of Indian tribes by the CSLB, and a number of project-specific bills, as is typical, related to project-specific alternative project delivery methods. Wishing you and yours a great 2025! Licensing AB 2622 – Increases the small work licensing exemption from $500 to $1,000 provided that the work: (1) does not require a building permit; and (2) does not involve the employment of others to perform or assist in the work. Read the full story...
Reprinted courtesy of Garret Murai, Nomos LLP
Mr. Murai may be contacted at gmurai@nomosllp.com

Toolbox Talk Series Recap - Undocumented Change Work

October 15, 2024 — Douglas J. Mackin - The Dispute Resolver
In the August 29, 2024 edition of Division 1's Toolbox Talk Series, Don Rea presented on the causes of undocumented change order work and what actions parties to a construction project can take to protect themselves, which compliments and reinforces some of the key points from the May 30, 2024 Toolbox Talk on maximizing profits while experiencing changes during project performance. Article 7 of AIA A201 General Conditions covers (i) change orders, (ii) constructive change directives, and (iii) “minor changes.” Work that falls outside the scope of the construction contract will often fit into one of these three categories. Rea’s presentation focused on the fact that, regardless of which category applies, proper documentation of the change work is vital. Read the full story...
Reprinted courtesy of Douglas J. Mackin, Cozen O’Connor
Mr. Mackin may be contacted at dmackin@cozen.com

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